Federal law provides that if any U.S. person during a calendar year has a “financial interest” or “signature authority” or “other authority” in offshore “financial accounts” that in the aggregate exceed $10,000, they must disclose the foreign accounts on a FinCen Form 114 (“FBAR”). A “financial interest” includes any interest in an account titled in the name of a U.S. person, regardless of whether the account is maintained for his or her benefit. If the account is held in joint names or in several different names, each U.S. Person involved is deemed to have a related financial interest. “Signature authority” or “other authority” are also defined in a manner as to prevent game playing. A person is treated as having signature authority over an account if he or she can control the disposition of the underlying assets by “comparable power.”
There are serious consequences for foreign account holders who do not report the accounts on an FBAR. Account holders who do not comply with FBAR requirements may be subject to civil, criminal penalties or both. The maximum civil penalty for a willful violation of FBAR reporting and record-keeping requirements is the greater of $100,000 or 50 percent of the balance in the balance in the account at the time of violation. Even non-willful violations can result in penalties of $10,000 per violation.
Once the Internal Revenue Service issues a 3708 Letter, the Internal Revenue Service can levy wages or Social Security Benefits to collect the assessed FBAR penalties and assess a delinquency penalty on the FBAR penalties. There is no statute of limitations preventing the Internal Revenue Service from collecting an FBAR penalty assessment. If you have been assessed an FBAR penalty, it is vital to have a knowledgeable and experienced tax attorney to assist you to determine if you may contest the FBAR penalty in court. At Diosdi Ching & Liu, LLP, our attorneys are one of a select group of litigators who has litigated FBAR penalties in court and we may be the only lawyers that has utilized the Administrative Procedure Act in court to prove that the Internal Revenue Service abused its discretion in assessing FBAR penalties.
We challenge you to find more passionate and aggressive tax lawyers to represent you in court and to contest an FBAR penalty than here at Diosdi Ching & Liu, LLP.